Call from housing industry for an end to restrictions on foreign buyers in Australia
More restrictions on foreign investors and buyers of property in Australia could have an unwelcome effect on the real estate market, it is suggested.
According to the latest national outlook report from the Housing Industry Association the role played by foreign investment in growing the country’s housing stock should not be overlooked.
It says that Government interventions into the market such as stamp duty charges on foreign investors, Federal charges for foreign investors, a new set of visa rules that could slow overseas migration, restricting lending to domestic investors and new regulations limiting interest only lending are punitive.
And it also points out that the Chinese Government has also imposed restrictions on capital leaving the country which may have a significant impact on Australian home building.
‘Foreign investors have been attracted to the Australian housing market and they have been investing billions annually in the construction of new residential dwellings,’ said Tim Reardon, HIA’s principal economist.
‘These investors have contributed to activity and employment in metropolitan areas building the supply of new housing stock and easing pressure on rental markets. Governments of all jurisdictions should proceed with caution when imposing new punitive measures on this segment of the market,’ he explained.
‘Foreign capital is highly mobile and if it is forced from the market rapidly it could accelerate the downturn in the sector unnecessarily. A number of state governments have recently hit foreign investors with punitive charges. The Australian Government has also imposed additional regulations that will impact on investors in the sector,’ he added.
The HIA is forecasting that building activity will decline modestly from record highs over a number of years, consistent with typical cyclical trends in the industry. Activity will bottom out in 2019 with activity still at solid levels.
‘The housing sector has already stepped back from its role driving the Australian economy and now is not the time for governments to hit the industry with punitive charges,’ Reardon pointed out.
‘There is a risk if uncoordinated and poorly considered policies are introduced to curb foreign investment that the decline in activity in the sector will be accelerated,’ Reardon concluded.